Business

TOKYO — Toyota Motor Corp. is still at the top in global vehicle sales after the first quarter, selling 2.52 million vehicles around the world, outpacing rivals Volkswagen and General Motors even as weakness in Japan dragged on its growth.

The Japanese automaker has been the world's top-selling automaker for the past three years. No. 2 Volkswagen Group of Germany reported last week that it sold 2.49 million vehicles for the January-March period.

Volkswagen edged out US automaker General Motors Co., which reported global sales of 2.4 million vehicles earlier this week.

Toyota's global vehicle sales, according to the number released Thursday, were down 2 per cent from a year earlier, as vehicle sales in Japan lagged. Volkswagen's sales were up 1.8 per cent year-on-year, while GM's were up 1.9 per cent.

The race among the three automakers is intense, playing out worldwide, including relatively new markets such as India and China, although each of them emphasize that the real competition is about coming out with good products, not beating rivals.

Toyota, which makes the Prius hybrid, Camry sedan and Lexus luxury models, has had its ups and downs, such as a recall fiasco that began in 2009, as well as the 2011 tsunami and quake disaster in northeastern Japan that hobbled its parts-supply chain and factory production.

Toyota President Akio Toyoda, the grandson of the company's founder, put ambitions for aggressive growth on hold for some years after the recall scandal, which resulted in millions of vehicles being recalled, mostly in the US, for an array of defects.

But he recently said Toyota is ready to start growing again, although cautiously and gradually, focusing on shared parts across a variety of models that will allow the automaker to cut costs while honing in on quality control.

GM is embroiled in a defect problem of its own since last year, over problem ignition switches.

The Detroit-based automaker, which includes Chevrolet, Opel, Buick and Cadillac as its brands, was the top-selling automaker for more than seven decades until being surpassed by Toyota in 2008.

Volkswagen, which has Audi and Bugatti under its wing, has come from behind with fantastic speed in recent years, including key markets such as China where potential for growth remains great.

In 2014, Toyota became the first automaker in the industry's history to sell more than 10 million vehicles around the world in a year.

MOSCOW – Western companies are sticking with Russia, waiting for an economic rebound that they expect will once again bring rich rewards although some have cut operations to weather the slump.

Russia is expecting a steep recession this year, caused by low international oil prices and Western sanctions over the Ukraine conflict even though international tensions have eased.

US carmaker General Motors is the highest-profile example of a Western company significantly scaling back its Russian operations, citing long-term challenges after a fall in sales.

But there have not been any major departures and others are still planning investment.

Typical sales of global manufacturers are expected to grow 6-8 per cent in rouble terms this year despite the downturn and sales rates of 12-18 per cent seen just two years ago are still fresh in executives' minds.

"For everyone its absolutely clear that this is a big market that will be back over time," said Alexander Ivlev, managing partner of Ernst and Young in Moscow.

The immediate prospects for Western companies in Russia are dim. Household spending is falling — bad news for multinationals, drawn by the large consumer market and an expanding middle class, which is now tightening its belt. Russian companies have also cut spending.

German industrial group Siemens, maker of big-ticket consumer items such as washing machines and fridges, as well as  heavy machinery, has seen sales in Russia plunge by about half Germany's Bild am Sonntag reported, citing chief executive Joe Kaeser. Yet the company says it has no plans to curtail investments in Russia.

Other global companies, such as confectionary giants Nestle and Mars, are also hoping to keep to their development plans.

"We are doing everything we can to continue development despite the slowdown of the Russian economy. We are still confident in Russia's long-term prospects," Nestle Russia CEO Maurizio Parnello said last month.

Nestle's sales in the Russia-Eurasia region rose 13 per cent last year in local currency terms to 86.4 billion roubles ($1.67 billion).

And Swedish furniture giant IKEA is pressing ahead with plans to invest 2 billion euros in Russia by 2020, adding to its 14 shopping centres by expanding into smaller cities with untapped potential.

"Our plans have not changed," said Konrad Grüss, deputy retail manager for IKEA Russia. "The needs are the same in Russia as in the rest of the world: a nice kitchen, a nice bathroom, all the dreams and wishes as everybody else."

Daniel Thorniley, head of CEEMEA Business Group, a Vienna-based consultancy that researches multinationals in the region, said for a typical global manufacturer in Russia 2015 sales growth of 6-8 per cent in rouble terms is realistic — barring a reescalation in the Ukraine conflict. That compares with growth of around 12-18 per cent two years ago.

If the rouble remains stable in 2015 — or strengthens as it has done so far this year — such a growth rate would translate into dollars or euros, which "would actually make Russia one of the best markets in the world for clients", he said.

The Russian market also matters for multinationals because of its sheer volume — often accounting for as much as the rest of Central and Eastern Europe, including all other ex-Soviet states and Turkey, put together.

These high volumes translate into healthy profits even if sales disappoint, thanks to traditionally high "premium" prices charged in the country.

"Russia was a super-premium price market and high profitability. Now it's going to come down," Thorniley said. "But even if it comes down off those highs it might not be that bad."

New opportunities 

Central bank data show investment has slumped. Non-bank foreign direct investment into Russia was $3.1 billion in the first quarter — down from $10.5 billion a year earlier and $36.6 billion in the first quarter of 2013.

But firms are biding their time while some may have already found that sanctions and the weaker rouble have provided new opportunities.

"Companies are looking for the future and looking for the right moment," said Ernst and Young's Ivlev.

He said foreign companies see opportunities for local expansion in electronics, pharmaceuticals and agribusiness where there are opportunities to replace imports.

Danish pharmaceuticals giant Novo Nordisk, the world's largest producer of insulin for diabetes sufferers, opened a $100 million factory in Kaluga this month, its first in Russia.

"If you were just making short-term investment decisions then you could say the economic climate is not good," said Novo Nordisk's country manager Henrik Dahl. "But investing in diabetes care for us is a long-term investment.”

AMMAN — A high level delegation headed by Khurram Dastgir Khan, minister of commerce of Pakistan, will be visiting Jordan from April 28, 2015 in connection with the 9th session of Joint Ministerial Commission (JMC) which will take place on April 29 and April 30, 2015 in the Ministry of Industry, Trade & Supply, Amman. Pakistan-Jordan economic relations are governed by the JMC, which was formed in 1975. This platform is extremely important in that it helps both sides to take stock of existing trade relations in a detailed manner and propose/initiate new projects. The JMC meets alternately in Islamabad and Amman. Eight sessions of the JMC have been held so far. During the upcoming session, both sides will review all aspects of bilateral relations particularly in the field of commerce and trade. The joint commission will further consolidate the existing strong and brotherly relations between Pakistan and Jordan besides signing a number of agreements. The visiting minister will also meet high level Jordanian dignitaries during his stay in Amman.

AMMAN – Arab Bank Group announced Wednesday that net profit after tax and provisions went up to $217.2 million during the first quarter of 2015 compared to $216.3 million in the previous year.

Loans and advances increased by 3 per cent to reach $23.7 billion, compared to the same period last year, while customer deposits reached $34.7 billion, the bank said in a statement e-mailed to The Jordan Times.

Adjusting for the impact of exchange rates, loans and customer deposits grew by 6.3 per cent and 4.4 per cent respectively.

Arab Bank Chairman, Sabih Masri said the results achieved in the first quarter reflect the bank’s commitment to maintain the quality of its loan portfolio and to strengthen its capital position. 

The bank’s capital adequacy ratio stood at a strong level of 14.6 per cent, according to the statement.

Commenting on the bank’s performance, Nemeh Sabbagh, Arab Bank’s CEO, indicated that excluding the effect of exchange rate devaluations, the bank’s net operating profit grew by 4 per cent compared to the same period of 2014.

In line with the bank’s prudent strategy, the bank continued to improve asset quality with the ratio of non-performing loans to net loans going down to 4.9 per cent at the end of March 2015 compared to the 5.6 per cent recorded by the end of March 2014. 

Operating expenses were maintained at the same level, the bank said, adding that liquidity continued to be robust with a loan-to-deposit ratio of 68.4 per cent.

Masri expressed his confidence in the bank’s financial performance and its ability to continue growing its profits in the years ahead on a sound and sustainable basis. 

AMMAN — InterContinental Jordan Hotel recorded last year its best performance ever, according to Zara Investment Holding's 21st annual report which listed it at the top of 5-star hotels in Jordan. 

In a disclosure to the Amman Stock Exchange, Zara's annual report indicated that, in 2014, the 450-room hotel achieved a 69.9 per cent occupancy rate compared to 62.7 per cent in the previous year and that the average room rate was JD129.4 compared to JD128.8.

It showed that InterContinental Jordan Hotel, 51.1 per cent owned by Zara Investment Holding, generated JD25.5 million in operational earnings last year (JD23.4 million in 2013).

After accounting for operational costs that amounted to JD17.5 million, compared to (JD17.1 million in 2013) net earnings of the hotel stood at JD8 million (JD6.3 million).

The report detailed the performance of the other six 5-star hotels under Zara's ownership indicating that net income from the 316-room Grand Hyatt Amman Hotel and its connected 90-room Hyatt Tower furnished apartments stood at JD5.1 million (JD4 million).  Operational earnings totalled JD17.3 million (JD15.1 million) and operational costs came at JD12.2 million (JD11.1 million). 

Net earnings derived from Movenpick Resort & Spa Dead Sea (362 rooms) amounted to JD2 million (JD2.1 million).  Operational revenues totalled JD13.2 million (JD13.4 million) and operational costs came at JD11.2 million (JD11.3 million). 

The contribution of  Movenpick Resort Petra (183 rooms) to the net operational earnings was JD2.8 million (JD2.5 million) as revenues amounted to JD6.6 million  (JD6.5) million and  costs totalled JD3.8  million (JD4 million). Both Dead Sea and Petra resorts are wholly owned by Zara Investment Holding. 

Net income generated by Movenpick Resort & Residences Aqaba (332 rooms) also wholly owned by Zara, reached approximately JD 1.1 million (JD1.9 million) as earnings dropped to JD8 million in 2014 from JD8.9 million in 2013 and operational costs were nearly steady at JD6.9 million in both years.

The performance of Movenpick Nabatean Castle Hotel (92 rooms) was negative as it posted a JD0.1 loss last year because the JD0.3 million  in revenue was not enough to cover the JD0.4 million operational costs. 

The Movenpick Resort & Spa Tala Bay Aqaba (306 rooms) maintained steady activities in 2014 and 2013 with an approximately JD2.7 million net earnings. In both years, operational revenues totalled around JD11.5 million and cost about JD 8.8 million.

Collectively, the consolidated operational earnings generated by Zara's seven 5-star hotels across Jordan, including InterContinental Jordan Hotel, amounted to JD82.7 million last year (JD79 million).

A breakdown of the revenue showed that 57.7 per cent came from room income, 35.1 per cent from food and beverages, and 7.2 per cent from diversified sources. 

By adding other income from various sectors to that from the hotels , gross earnings in 2014 rose to JD83.3 million (JD79.7 million).

Taking into account operational costs that totalled around JD61 million for all Zara facilities, the 2014 net operational income derived from the hotels and other sectors stood at JD22 million (19.9 million).

Zara Chairman Sabih Masri told the shareholders in a foreword that the 4.5 per cent rise in the combined operational earnings and the 1.8 per cent  increase in the net operational earnings were due to an equivalent of 5.7 per cent growth in occupancy rates that reached 56.4 per cent at all Zara hotels last year compared to 52.9 per cent in 2013.

According to the report, Zara owns 2,131 hotel rooms out of a 8,047 total within the 5-star category. 

Noting that the average JD114 per room rate was unchanged in both years and that the consolidated net profit amounted to JD1.4 million compared to a JD1 million loss in 2013, Masri described the results as good when taking into consideration the unstable and continued turbulences in neighbouring countries.

The chairman said Zara last year completed restructuring the company's debts, pointing out that over the past three years; debts came down by 54 per cent  from JD88.6 million at the end of 2011 to JD41 million at the end of 2014.

"By cutting financing costs, we will be able to distribute dividends to shareholders in the near future," he added.

Stressing that 2015 will be a year for enhancing measures to reduce costs through improving operational efficiency, Masri mentioned projects such as renewable and clean energy, and highlighted ongoing undertakings to supply hotels with electricity produced from solar cells, besides the shifting to liquefied natural gas and LED lighting at certain strategic areas in the hotels.

He also promoted the company for championing human resources development noting that, in cooperation with the Vocational Training Centre, Zara provided 128 training opportunities at the Saltos Hotel in Salt and another 154 at its hotels.  

The chairman underlined Zara's top role in the labour market indicating that its hotels employ 2,338 staff members or 26 per cent of the 9,068 workers hired by 31 5-star hotels in the Kingdom.

"The consolidated net profit at the end of last year amounted to JD1.4 million compared to JD1.5 million loss at the end of the previous year," Masri wrote in the foreword.

But the net profit that belongs to the shareholders of the mother company was slightly under JD0.5 million compared to more than JD1.2 million loss in 2013.

Capitalised at JD148.26 million, Zara's properties and equipment at book value stand at JD188.9 million.

WASHINGTON — The 12-nation Pacific trade pact would create nearly a quarter of a million US jobs due to increased foreign investment in the United States, a business group estimated on Monday, in the first look at the deal's employment impact.

The Trans-Pacific Partnership (TPP), a potential legacy-defining achievement for President Barack Obama, is near completion but has run into opposition from Democrats and others who worry the deal would cost US jobs.

The Organisation for International Investment (OFII), a trade group that represents the US operations of global companies, indicated that TPP would create 68,000 direct jobs tied to an estimated $20 billion boost in foreign direct investment.

The trade deal, which reaches from Japan to Chile, would also create another 165,000 "indirect and induced" jobs from US suppliers and other firms that employ additional workers when foreign spending in the United States increases, OFII said.

The group pointed out that California is likely to see the biggest boost in employment from TPP, followed by Texas and New York.

J. Muir Macpherson, an economist at Ernst & Young and one of the study's authors, said the TPP would create additional benefits for companies that already invest heavily in the United States.

"[So] even a small increase in foreign direct investment in the United States from the largest investors... would have very substantial impacts," he added.

Democrats worry that another free trade deal would siphon away US manufacturing jobs, as the North American Free Trade Agreement did in the 1990s.

Consumer group Public Citizen criticised OFII's report and its findings, saying other studies did not show that trade pacts like TPP actually boosted foreign investment into the United States.

"The report then translates its counterfactual hypothesis of increased foreign investment into a guesstimate of increased jobs, and then, incredibly, multiplies the spurious jobs number by three," said Ben Beachy, research director of Public Citizen's Global Trade Watch.

Public Citizen has said trade agreements over the last 20 years have led to a net loss of nearly 5 million manufacturing jobs in the United States and depressed wages.

But OFII estimated that the US manufacturing sector would add 52,000 jobs due to increased investment from the Pacific deal.

The group also said that a separate US trade agreement with Europe, the Transatlantic Trade and Investment Partnership, would create 334,000 direct jobs and 865,000 indirect or induced jobs tied to higher foreign direct investment in the United States.

Separately, Japan's top trade negotiator sounded an optimistic note on Tuesday that he could reach a deal with the United States that is essential to creating a free trade pact covering 12 countries.

A senior US State Department official also said on Monday that a deal is within "grabbing distance" as the world's largest and third-largest economies race to conclude bilateral negotiations that cover trade in car parts and farm products.

Japan and the United States have been locked in negotiations over the TPP, a US proposal that would connect a dozen economies by cutting trade barriers and harmonising standards covering two-fifths of the world economy and a third of global trade.

"I recognise that some countries were worried about the lack of progress between Japan and the United States," said Koji Tsuruoka, Japan's chief TPP negotiator. "However, bilateral negotiations over the past few days are a sign to everyone that we are making progress. We are now in the final stage."

A deal between Japan and the United States is considered vital to a long-delayed TPP trade pact, as their economies would account for 80 per cent of the group.

The United States and Japan have narrowed differences on trade in rice and cars, Japan's Economy Minister Akira Amari said on Tuesday after a marathon meeting on Monday with US Trade Representative Michael Froman.

"We haven't solved all of our problems, but we are headed in that direction," Amari added.

Amari met Froman for two days in Tokyo to discuss details of a possible deal, adding momentum to multilateral efforts toward TPP.

The two countries will continue working-level talks to try to narrow their differences further, Amari said.

When asked if he would meet Froman again before the Japanese prime minister travels to the United States next week, Amari said he wanted to "take a break”.

A trade deal between Japan and the United States is within reach, the US State Department's top diplomat for Asia, Danny Russel, said on Monday.

"We are within grabbing distance of an agreement with the Japanese," Russel told the Council on Foreign Relations.

The comment by Russel, the State Department's assistant secretary of state for East Asia and Pacific Affairs, comes ahead of an April 28 summit between US President Barack Obama and Japanese Prime Minister Shinzo Abe.

AMMAN — Al Baddad Holding Companies on Tuesday launched an aircraft maintenance centre in Aqaba, at a cost of around $75 million. 

The group's Chief Executive Officer Fateen Al Baddad said Al Baddad Aviation Company has acquired all the licenses needed from the government to begin with the first stage of the project, which will extend over 65,000 square metres of land at the King Hussein International Airport.

The project will provide around 300 job opportunities for Jordanians, for whom special housing units have been built near the centre. During the first stage of the project, the centre will provide maintenance services for Russian aircraft. 

Then, in 2016, it will expand its services to cover Boeing and Airbus aircraft.

The aircraft maintenance centre will include administrative buildings, hangars and workshops for aircraft maintenance and component overhaul and it seeks to provide maintenance services for aircraft at the regional and international level by 2017.

The centre project brings up the investments of Al Baddad group in Aqaba to $250 million.

AMMAN – Jordan Chamber of Commerce President Nael Kabariti on Tuesday met an official from the Brazilian embassy in Amman and discussed prospects for economic bilateral ties.

The two sides also discussed preparations to organise a visit for  Jordanian businesspeople to Brazil in order to explore opportunities for further cooperation.

Kabariti underlined the importance for Brazil to benefit from the Kingdom's distinguished geographical location and political stability for investment, especially in promising sectors, such as ICT, mining, medical tourism and pharmaceuticals.

For his part, the Brazilian official highlighted his country's interest in importing phosphate and potash from Jordan. 

KUWAIT CITY — More than 30 per cent of young Arabs are jobless because of unrest in many Arab nations and not enough investment, a top labour official said on Sunday.

"The unemployment rate among Arab youth until the age of 30 years exceeds 30 per cent," the director general of the Arab Labour Organisation, Ahmad Mohammed Luqman, told AFP. "Unrest and a lack of investments have boosted the number of jobless."

He said many graduates fail to find employment because their specialisations are not needed by private sector.

"Due to unrest in several Arab nations, the number of Arabs without jobs has jumped two million since 2011, making the total number of unemployed Arabs at 20 million," Luqman indicated on the sidelines of the annual Arab labour conference.

He told the opening session of the five-day gathering in Kuwait City that unemployment in the Arab world hit 17 per cent last year, "three times higher" than the global average.

"It appears that jobless numbers will rise this year and the next," Luqman said, without providing specific figures.

Guy Ryder, director general of the International Labour Organisation, warned that the youth unemployment problem is a threat to stability.

"Arab countries face the urgent and unavoidable task of responding to an acute crisis of unemployment," he told the conference. "Failure to provide them with opportunities for decent work is a potent threat to the stability of our societies."

Since 2011, uprisings have swept over Tunisia, Egypt, Libya and Yemen, forcing out veteran strongmen.

Protests calling for change have also shaken Bahrain in the Gulf.

In Syria, the uprising aimed at ousting President Bashar Assad has become a civil war that has killed more than 220,000 people.

Arab economies are estimated to be growing at between 2-3 per cent, but annual growth of around 6 per cent must be achieved if unemployment and poverty are to be contained.

AMMAN — 2014 was a distinguished year for Siniora Food Industries Company in all aspects, shareholders were told in the 6th annual report which was disclosed to the Amman Stock Exchange.

Chairman Tareq Omar Al Aqqad wrote in a foreword that sales last year reached JD43.2 million, 13 per cent higher than the JD38.2 million posted in 2013.

The company is in the business of  producing, distributing and selling processed meat products in addition to the import of raw materials.Products  include Cold Cuts, Roast and Luncheon, among others.

The report showed that Jordan accounted for JD20.6 million of the total sales last year whereas sales abroad stood at JD22.6 million.

Although the sales abroad increased by 10.2 per cent, the gross profit generated from the exports was higher by 63.3 per cent as it amounted to JD9.8 million compared to JD6 million gross profit derived from domestic sales.

Exports had the advantage of lower costs which stood at JD12.8 million compared to JD14.5 million in costs for the sales in the local market taking into consideration that the business domestically was JD2.1 million less than the sales abroad.

Aqqad highlighted the Saudi market where the company achieved a 30 per cent growth in sales that exceeded $8 million in 2014.

Sales to other regional markets grew by 14 per cent despite the exports' halt to some neighbouring countries due to unrest.

"What helped us achieve this progress was the growth in all Gulf Arab markets and the launch of new cold cuts in Lebanon," Aqqad said.

He gave a breakdown of the sales pointing out that those under the Unium trademark in Jordan exceeded the 2013 level by 10 per cent , widening the company's market share in the Kingdom to more than 53 per cent of the overall volume of processed meat.

Under the Siniora trademark that specialises in cold cuts, the growth in the Jordanian and Palestinian markets was 7 per cent and 17 per cent respectively.

"Thanks to the growth of our sales in the Gulf countries and to the World Food Programme tender for Luncheon supplies, we achieved unprecedented results," the chairman said.

According to the report, Siniora Food Industries enjoys between 25-30 per cent share of export markets depending on the country and the distribution channel.

The export markets were listed as Saudi Arabia, Palestine, Lebanon, United Arab Emirates, Kuwait, Qatar, Oman, Bahrain, Iraq, Yemen and Cameroon in west Africa. 

He indicated in the foreword that net profit surged by 62 per cent reaching JD5.4 million, up from JD3.3 million generated in 2013. 

A breakdown of last year's net profit showed that exports brought in JD3.7 million, 117.6 per cent more than the local market which contributed JD1.7 million.

Siniora's gross profit, before deducting selling and administrative expenses as well as financing costs and various provisions, was higher at JD15.9 million from JD12.5 million.

The chairman also mentioned that net shareholders equity in 2014 rose in 2014  by 23.5 per cent to JD25.3 million, compared to JD20.5 million in the previous year.

The company's capital investment at the end of last year amounted to JD19.3 million.

Capitalised at JD15 million after increasing the capital from JD12.6 million last year, the balance sheet as of December 31,2014 showed total assets at JD41.5 million, up from JD39.1 million at the 2nd of 2013.

Of the total, JD19.3 were net fixed assets, JD2.2 million were intangible assets and deferred tax and JD20 million were current assets.

Current liabilities, including JD1.6 million in short term debt, declined from JD10.2 million at the end of 2013 to JD9.3 million last year.

Long-term debt also dropped from JD7.5 million to JD5.9 million in 2014 bringing total liabilities to JD16.2 million when also taking into consideration the provision for end of service indemnity.   

According to the balance sheet, mandatory reserve and retained earnings totalled JD10.3 million from JD7.9 million in 2013.

The Arab Palestinian Investment Company (APIC) controls Siniora Food Industries Company with a 61.2 per cent stake followed by Aram Financial Investment with a 30.3 per cent equity, and Arab Bank MENA Fund with 2.4 per cent.

Around 520 employees work at Siniora's offices and factories in Amman,  Jerusalem, Riyadh and Jeddah noting that the subsidiaries include Siniora Food Industries Palestine and Siniora Saudi Trading Company. 

Siniora Food Industries Algeria is under liquidation.

The company has recently opened a branch in Aqaba in addition to the one in Irbid which was opened in 2010.

The general assembly of shareholders will hold an ordinary meeting today (Tuesday) to consider the distribution of cash dividends at a rate of 10 per cent as recommended by the board of directors.